Ice Cream

Essay by EssaySwap ContributorUniversity, Master's February 2008

download word file, 5 pages 0.0

Midwest Ice Cream EXECUTIVE SUMMARY It is recommended that Jim Peterson use the following outline for the presentation to the board of directors at Midwest Ice Cream Company. Outline for Presentation · Introduction · Identify the problem · Analyse Figure 1 and Illustrations 1 - 3 · Commend the areas that did well · Discuss the corrective actions to consider · Make recommendations · Conclude the presentation The following case study provides Jim Peterson with all the necessary information to make a non-technical presentation to the board of directors. INTRODUCTION Budgeting is a vital element of the management planning and control process. Budgeting is the process that translates corporate intentions into specific tasks, and identifies the resources needed by each manager to carry them out. In the process, budgeting enhances communication and co-ordination of different administrative units, facilitates decision-making, and provides a framework for monitoring and for performance evaluation. All managers are responsible for preparing a budget.

Since specific departments play important roles in improving various components of the balance sheet and the income statement, it is critical that they prepare their budgets in a responsible way. Once budgets are in place it is necessary to analyse the difference between the actual and budgeted costs (variance). A variance analysis involves the decomposition of the variance into the individual factors that caused the variance. Managers need to be able to understand how to break down and analysis the variances; this helps them determine the proper corrective action. PROBLEM The Midwest Ice Cream Company is doing many things wrong, and the mistakes they are making are being covered up by a poorly planned budget. ANALYSIS The overall variance at Midwest Ice Cream is $71,700F . This is considered a good variance because it means they made more money than their original budgeted...